Here’s one massive reason investors should avoid shares of HSBC Holdings plc (SEHK: 5). –
One of Hong Kong’s leading banks, HSBC Holdings plc (SEHK: 5) has been on a downward trajectory for a while now.
HSBC shares have hit a multi-year low as the bank grapples with the fallout from the anti-government Hong Kong protests and the impact from the Covid-19 pandemic. What looks like a “third wave” in the city will further pressure bank stocks.
HSBC has also been caught in the crosshairs of the spat between the UK and Chinese governments given its UK domicile juxtaposed against the reality of the bank’s Hong Kong- and Asia-centric business.
Over the past 15 years, HSBC shares have declined around 70% whereas the Hang Seng Index is actually up close to 70% over the same period.
As the bank is one of my leading stocks for investors to avoid in 2020 and beyond, none of the above is actually the biggest reason to shun HSBC (although they certainly contribute).
Given that “losers keep losing”, here’s one big reason why I think HSBC’s share price is destined to keep heading south.
Massive lack of technology
As investors, we can gauge the worthiness of a business by, besides the obvious, actually interacting with the business itself.
First-hand experiences with a company can tell investors a lot about whether it is a business that has a viable (and bright) future as a stock.
In HSBC’s case, my experiences with the bank have been nothing short of abysmal. The bank is notorious for its bureaucracy and forcing customers to fill out endless paper forms.
Unfortunately, I was recently subject to this. Trying to update my personal details (primarily my phone number) in order to continue accessing online banking ended up with an HSBC customer service officer informing me that I would have to download a paper form, sign it and then mail it to Hong Kong’s HSBC office.
The fact that I now live in Singapore didn’t matter and that the Covid-19 pandemic has been ongoing for much of the year didn’t seem to either.
It appears as though HSBC processes are stuck in the analog age of the environmentally unsustainable and digitally illiterate use of paper.
When will HSBC go digital?
If ever there was a time to innovate for HSBC, it is now. in Singapore, the country’s leading bank DBS Group Holdings (SGX: D05) has a new motto which encapsulates most peoples’ attitudes towards their bank:
Live more, Bank less
It’s based off the premise that as a customer, we don’t actually want to have much contact with our bank on a regular basis. The less time we can spend doing mundane and bureaucratic process for our banks, the better.
However, HSBC’s unofficial motto appears to be “Live less, Bank more”. I visited the HSBC Hong Kong website to download the above form and found that the bank also houses PDF forms to download for multiple services ranging from Investment and Insurance to Mortgages and Loans.
There are literally hundreds of PDF downloadable forms on its website. It’s astounding how backward and ancient the bank’s processes continue to be in 2020.
This seemingly-eternal lack of investment in its technological capabilities will, I believe, lead it into irrelevance in the digital era.
Invest in the world you want to see
The Motley Fool co-founder David Gardner has a great saying about investing in companies:
“Make your portfolio reflect your best vision for our future”
I genuinely believe that investing in companies that make the world a better place will also end up making us, as investors, wealthier in the process.
One reason why I own e-signature provider Docusign Inc (NASDAQ: DOCU) – besides it being a great company – is that its mission is to make peoples’ lives easier and more efficient while also helping the environment by ditching the need for paper-based contracts.
In my opinion HSBC, as a company, represents the exact opposite of this. At the end of the day, that’s why investors should avoid a stock that has been losing for as long as HSBC has.
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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Hong Kong contributor Tim Phillips owns shares in DocuSign Inc.
The Motley Fool Hong Kong Limited(www.fool.hk) 2020